FG Contemplates Fuel Price Hike … Amid Conflicting Signals

Two government officials yesterday gave diverse indications on what government is considering to resolve the current petrol scarcity.
While a state governor who briefed journalists after a meeting presided by Vice President Yemi Osinbajo hinted at a possible price increase, the Minister of State for Petroleum said such was not being contemplated.
The federal government and the state-owned NNPC have repeatedly vowed that there was no plan to increase the N145 per litre official price of the product despite the scarcity. This is despite the fact that most Nigerians across the country pay about N200 per litre to buy the scarce commodity.
An indication of the possible price increase was provided by a state governor who briefed journalists at the end of the National Executive Council, NEC meeting. The meeting, attended by most state governors, was presided by Vice President Yemi Osinbajo.
Governor Mohammed Abubakar of Bauchi told journalists that the NEC asked one of its committees, interfacing with revenue agencies in the country, to work on getting the correct price for petroleum products.
He said the committee is headed by the Governor of Gombe State, Ibrahim Dankwambo.
Mr. Abubakar said the committee “has been charged with the responsibility of interfacing with NNPC with a view to determining the correct price for PMS (petrol) considering the price of the product especially in countries that are bordering Nigeria.”
The Bauchi governor said the NEC realised that the price differential between Nigeria and her immediate neighbours is one of the reasons why the product is being smuggled, thereby causing its scarcity in the country.
While Nigeria, Africa’s largest oil producer keeps its official price at N145 per litre, the price is as high as N375 per litre in neighbouring countries like Chad, according to a petrol price monitoring website, globalpetrolprices.com. The NNPC and other government agents and officials have blamed this price differential for the large scale smuggling of petrol to neighbouring countries. Critics have however described such large scale smuggling as failure of government that has failed to secure the country’s borders.
He said Mr. Baru told the council that the scarcity is also partly caused by an inter-play of the exchange rate of the naira to the dollar and the price of crude oil at the international market which affects the landing cost of refined products in Nigeria.
He said the process makes the operation of the N145 price almost impossible without some measured assistance. The NNPC had recently said it was bearing the loss on behalf of Nigerians for petrol to be sold at N145 per litre.
“As at today, most, if not all independent marketers have stopped importing refined products into Nigeria. It is only the NNPC that has been doing it. And the NNPC has been suffering a lot of setbacks.
“If the product lands at N170 for example and you sell at N145, immediately you know that you have an under recovery of about N25 for each litre of fuel,” the Bauchi governor said.
The Minister of State for Petroluem Resource, Dr Ibe Kachikwu, also yesterday, however, said the government was not considering a price hike.
He said the federal government is set to finalise the decision on the private sector financiers for the rehabilitation of the country’s three refineries in Kaduna, Port Harcourt and Warri.
Kachikwu had said last October that government was planning to select, this February, successful bidders from the list of 26 firms that submitted bids to refurbish the four refineries.
“We are almost at a threshold of finalising the process of selection (of bid winners). The successful bidders could be announced by January or February next year,” Mr. Kachikwu said.
Yesterday, Kachikwu said the overhaul of the refineries would see Nigeria become a net exporter of petroleum products by 2019.
He lamented the lingering fuel scarcity across the country, blaming the inability of government to address the problem on logistics and policy issues.
He spoke in Abuja while addressing reporters on his ministry’s plan to host the Nigerian International Petroleum Summit (NIPS), a new oil and gas conference and exhibition scheduled for next week in Abuja.
To resolve the current fuel supply crisis, which resurfaced in the country in November last year, he said government would need to address certain fundamental policy issues, especially with regards to petrol pricing.
“Behind the scenes, a lot of meetings are taking place, because the fuel queue issue borders on both logistics and policy issues,” he said.